Exploring the associations between institutional constraints and entrepreneur’s perception in future business climate

Abstract

Purpose – although many studies emphasise that institutional environment shapes business activity, yet it is not clear enough how legal environment, tax administration and stimulation policies are associated with entrepreneur’s perception in the future business climate. This paper seeks to explore these associations in the context of a post-communist transition country. Research methodology – the research takes an institutional perspective, and its analysis is conducted on a firm-level data collection through a face-to-face survey. Kruskal-Wallis test followed up by Jonckheere-Terpstra and Mann-Whitney tests, were employed in a dataset of 404 firms operating in Albania. Findings – the analysis offers important insights into the nature of entrepreneurship in a post-communist setting. It was found a significant association between future business climate and legal environment and tax administration. Between stimulation policies and business climate was reported an insignificant association. High levels in the legal environment and tax administration lead to the less favourable future business climate. Research limitations – though Albania has similarities with other transition countries in terms of regional, economic and political environments, the generalisation of these results to another context is limited. Originality/Value – this research provides insights for scholars studying entrepreneurship in institutional transformation contexts, and it contributes to the accumulation of knowledge on transition countries by focusing on the little-studied case of Albania.